Tax revenues up in September, but still lag behind 2009

For the first time in nearly two years, Mesa County has reported a year-to-year increase in sales tax collections.

Meanwhile, the City of Grand Junction reported its largest proportional year-to-year increase in sales and use tax collections.

According to its September report, Mesa County collected $3.03 million in sales taxes, a 6.72 percent increase over collections reported in September of 2009.  The year-over-year gain was the first since November 2008.

The City of Grand Junction reported collecting $4.21 million in September for a 17.1 percent increase over the same month last year and third consecutive monthly gain in year-to-year collections.

September tax collection reports reflect spending in August. For the city, the proportional gain can be deceiving, however, because some of the September collections represent the payment of tax bills that were due several months ago, said City Manager Laurie Kadrich.

The increases in sales tax collections come on the heels of similar increases in lodging tax revenues over the past few months. The Grand Junction Visitor & Convention Bureau reported  $130,290 in lodging tax collections in September, 3.55 percent more than the same month last year. Lodging tax reports lag a month behind actual stays in local hotels and motels. Year-over-year lodging tax revenues have climbed for three straight months.

For the first nine months of 2010, however, tax collections continue to lag behind the same period in 2009.

Mesa County sales tax collections totaled $24.71 million for reports filed from January through September —  a
10.09 percent drop from last year. Meanwhile, the city collected $33.91 million in sales and use taxes for reports covering the first nine months of this year, a 6.8 percent drop.

The VCB reported $858,312 in lodging tax revenues for reports covering the first nine months of the year. That total is 7.8 percent lower than last year. The VCB is anxiously awaiting the October report, which will reflect hotel business in September, traditionally the busiest month of the year in the Grand Valley. October is another key month as tourists visit Colorado to enjoy temperate weather and fall foliage.

Falling tax revenues have prompted steep cuts in county and city budgets cuts over the past 18 months. More cuts are planned for 2011.

Mesa County commissioners are considering a proposed budget that’s 10.3 percent lower than the adopted budget for 2010. At $141.95 million, the 2010 budget in turn was 8.4 percent lower than the 2009 budget. The county plans further staff reductions, a salary freeze, the closure of some county branch offices and reduced funding for the Grand Junction Economic Partnership and Museum of the West.

The county is bracing for more of the same in 2012, when reduced property values will likely lead to a substantial drop in property tax revenues.

While county administrators are required to submit a budget proposal by Oct. 15 each year, public discussion of the proposed cuts occurred during the summer to accommodate the potential severity of the cuts.

“We wanted to be ahead of the information,” said Stefani Conley, acting Mesa County administrator.

Conley said said the 45 full-time positions that were eliminated actually translate into the layoff of 30 people and a decision to leave 15 positions unfilled.

The county is planning for 2011 spending on the presumption tax revenues will be the same as for 2010. Should revenues increase, there won’t be any corresponding increase in spending, Conley said. That’s because the county wants to build reserves in anticipation of declining property tax revenues.

Should Colorado voters approve Amendments 60 and 61 and Proposition 101 on the November ballot, Conley estimates the county will have to cut another $7 million from next year’s budget.

Amendment 60 would require publicly owned entities to pay property taxes and establish expiration dates for future voter-approved property tax increases. Amendment 61 would prohibit governments from borrowing money beyond this year without voter approval and require that tax rates be reduced after borrowing is fully repaid. Proposition 101 would gradually reduce the state income tax rate from 4.63 percent to 3.5 percent and reduce or eliminate taxes and fees on vehicle purchases.

The 2010 budget for the City of Grand Junction originally totaled $134 million,  $15 million less than the adopted budget last year. Budget cuts will reduce the final  level below $134 million this year.

In planning for spending next year, Kadrich has instructed department directors to prepare three budget scenarios —one that calls for a slight increase in spending, one that calls for a 5 percent reduction from 2010 spending and one that reflects the effects of passage of Amendments 60 and 61 and Proposition 101. If voters approve the ballot measures, Kadrich estimates the city would have to lop off at least another $12 million from next year’s budget.

The city this year instituted a 3 percent pay cut for employees in addition to staff reductions. The city also suspended the overlay program for many city streets. Should the economy remain sluggish compared to three years ago, Kadrich said people will begin to see a difference in the condition of city streets. “I think citizens are going to begin to notice a significant deterioration of the roads compared to the last five or six years.” Road conditions are among the most frequent complaints in calls to the city. Comments about potholes, cracking curbs and other street-related items trail only calls about weeds and junk, she said.

While street maintenance has been curtailed, the city moves ahead with construction of a 29 Road viaduct over the Union Pacific Railroad tracks. The city is sharing the cost with Mesa County. The project and related spending are scheduled to end before 2012. “We had to make that commitment (to capital construction of roadways) so that we don’t have a backlog,” Kadrich said. “We’re trying to maximize what we can do.”

In addition to the proposed ballot measures, Kadrich is concerned about the ongoing effects of the Taxpayers Bill of Rights, a constitutional amendment approved by voters in 1992. TABOR limits government spending by a formula that includes population growth and inflation in the Denver-Boulder area. When revenue is based on a previously poor year for tax collections —such as 2009 and 2010 — there’s no provision to catch up by stashing away additional revenue during a flush collection year. However, voters in Grand Junction have given the city authority to spend funds collected above the TABOR limit to pay off bonds issued to finance the Riverside Parkway as early as possible. The city hopes the annual $7 million bond payment for the parkway will end by 2017. Once the parkway bonds are paid, the TABOR waiver is set to end.

As for the local growth portion of the TABOR formula, it seems to be anybody’s guess whether or not the local population continues to grow. The Mesa County population increased more than 50 percent from 1988 through 2008, but a downturn in energy development combined with an economic recession have forced many people to leave the area over the past two years. Whether or not they’ve been replaced by newcomers should be gleaned from the results of the 2010 census, which should be released in coming weeks.

For 2011, the city tentatively plans to freeze employee wages and reduce the city’s contribution to employee health care packages. More changes could be announced by the time the Grand Junction City Council approves a final budget in December.